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Friday, June 11, 2021

Why did US treasury secretary contact China Liu He? - Part 2

Our suspicion was proven right!  The US CPI hit 5% which was the highest since 2008.

No wonder Yellen had to call Liu He during his office hour (daytime) which meant that she called him during her nighttime because she knew that time was not on the US side.

She has to contain the US inflation fast if she doesn't want to see a financial crisis happening in 2022.

Furthermore, the US has an excessive liquidity problem as the US FED is collecting about US$500B daily in the reverse repo market now.  Some of the excess funds also go into the treasury market and pushing down the treasury yields.  The falls in the treasury yields mean that a bubble is forming in the treasury market now.

1 comment:

Eric Ho said...

China has initiated the US playbook by calling for the removal of US-China tariffs after the call between Yellen & Liu He.

Let's see what the US will do.